FINAL NPS PPT 30 AUG.pptx

Confidential © Copyright 2010 Wipro Ltd 1
ASSESSMENT OF NATIONAL PENSION
SYSTEM & IT’S FUND MANAGERS
PRESENTED BY:- COMDT. VS THAKUR

OBJECTIVES
• TO STUDY THE STRUCTURE & CONCEPT OF NPS
• TO STUDY IMPORTANCE OF NPS FOR RETIREMENT
PLANNING
• TO STUDY TAXATION ASPECT OF NPS
• TO EVALUATE PERFORMANCE OF NPS & NPS FUND
MANAGERS TO IDENTIFY BEST PENSION FUND TO
CHOOSE FOR RETIREMENT PLANNING & INVESTMENT
• COMPARISON BETWEEN OLD PENSION SYSTEM & NPS

RESEARCH METHODOLOGY
• DESCRIPTIVE, ANALYTICAL & CONCEPTUAL STUDY
• STUDY BASED SECONDARY DATA
• SECONDARY DATA COLLECTED FROM OPEN SOURCES

WHY GOVT. INTRODUCED NATIONAL PENSION SCHEME
• LESSER COVERAGE FOR OPS
• FISCAL BURDEN
• FUTURE COMMITMENTS
• DISINCENTIVIZE EARLY RETIREMENT

Overview of
National Pension
System (NPS)
Central
Govern
ment
State
Government
All
Citizens
of India
Corporate
Sector
NPS Lite

An Overview of National Pension System (NPS)
 Government of India introduced NPS for Central Government Employees
joining services w.e.f 1st Jan 2004. On 1st May 2009, on voluntary basis NPS
was made available for All citizens of India.
 PFRDA was created as regulator for the Pension sector.
 NPS is based on Personal retirement accounts (PRAs) created for individual
members.
 NPS accretes savings into subscribers PRA while he is working and use the
accumulations at retirement to procure a pension for the rest of his life
0 to 18 18 to 65 65 Onwards
Age
Group
NPS aims at creating enough
corpus, to enable subscriber
for purchasing Annuity post
retirement

An Overview of National Pension System (NPS)
 Over a 13 year period, compounded annual growth of more than 10%
(exactly 10.27%).
 Given investors inflation protected returns.
 Total assets under management Rs. 7.72 lakh crores.
 Maximum joining age increased to 70 years and age for exit increased to 75
years.
 Annuity purchase can be deferred up to age of 75 years.
 Investment choice can be changed four times in a financial year.

Development of National Pension System (NPS)
 PFRDA took step-by-step approach towards NPS.
 Phase(I)- NPS for CG and CG autonomous organizations employees
introduced wef 01 Jan 2004.
 Fund management begins wef 01 Apr 2008.
 PFRDA developed required infrastructure.
 PFRDA extended NPS to all citizens wef 01 May 2009.
 Tier-II started wef 01 Dec 2009.
 NPS lite started wef 22 Jul 2010.
 Passage of PFRDA bill in Sep 2013.

NPS Architecture
9
Subscriber
POP-SP/
Nodal Office
NPS Trust
Fund Flow
Funds Flow
Information Flow
NAV
The Regulator
(PFRDA)
POP/ Oversight
Mechanism
Online
NPS has unbundled Architecture, where each function is performed by
different entity

NPS Intermediaries
 Issue instructions to the custodian,
Pension Fund Managers and Trustee Bank
 Issuing investment guidelines
 To issue directions to PF(s) for protecting
the interest of subscribers
 Ensuring compliance through audit by
Independent Auditors
 Performance review of Pension Fund
Managers
NPS Trust

NPS Intermediaries
 Recordkeeping, Administration and customer
service functions for all NPS subscribers.
 Issue of unique Permanent Retirement Account
Number (PRAN) to each subscriber.
 Maintaining database of all PRANs issued and
recording transactions relating to each
subscriber’s PRAN.
 Issuance of PRAN Transaction Statement.
 Acting as an operational interface between
PFRDA and other NPS intermediaries such as
Pension Funds, Annuity Service Providers,
Trustee Bank etc.
Central Record Keeping Agency
(CRA)
Central Record Keeping
Agency
is
National Securities
Depository Limited
(NSDL)

NPS Intermediaries
 First point of interface between voluntary
subscriber and NPS architecture
 Provides NPS services to subscriber
 Subscriber Registration
 Regular subscriber’s contribution
 Change in subscriber details
 Change of investment scheme/fund manager
 Processing of withdrawal request
 Processing of request for subscriber shifting
 Issuance of printed Account statement
 Any other service prescribed by PFRDA
Points of Presence (POP)
Various Organizations
are selected by PFRDA
to act as Point of
Presence (POP)
Under NPS
List is provided in next
slide

List of POPs (Alphabetical order)
1. Abhipra Capital Limited
2. Alankit Assignments Limited
3. Allahabad Bank
4. Andhra Bank
5. Axis Bank Ltd.
6. Bajaj Capital Ltd.
7. Bank of Baroda
8. Bank of India
9. Bank of Maharashtra
10. Canara Bank
11. Central Bank of India
12. Citibank N.A
13. Computer Age Management Services Pvt.
Ltd.
14. Corporation Bank
15. Dena Bank
16. Elite Wealth Advisors Limited
17. HDFC Securities Limited
18. ICICI Bank Limited
19. ICICI Securities Ltd
20. IDBI Bank Limited
21. IL &FS Securities Services Ltd
22. India Infoline Finance Limited
23. India Post NPS Nodal Office
24. Indian Bank
25. Indian Overseas Bank
26. Integrated Securities Ltd
27. Karvy Financial Services Limited
28. Kotak Mahindra Bank Limited
29. Marwadi Shares and Finance Limited
30. Microsec Capital Limited
31. Muthoot Finance Limited
32. Oriental Bank of Commerce
33 Punjab and Sind Bank
34 Punjab National Bank
35 Reliance Capital Limited
36. State Bank of Bikaner and Jaipur
37. State Bank of Hyderabad
38. State Bank of India
39. State Bank of Indore
40.State Bank of Mysore
41. State Bank of Patiala
Bank

List of POPs Contd..(Alphabetical
order)
42. State Bank of Travancore
43. Steel City Securities Ltd
44. Stock Holding Corporation Of India Ltd
45. Syndicate Bank
46. Tamilnad Mercantile Bank Ltd
47. The Federal Bank Ltd.
48. The Karur Vysya Bank
49. The Lakshmi Vilas Bank Limited
50. The South Indian Bank Ltd.
51. UCO Bank
52. Union Bank of India
53. United Bank of India
54. UTI Asset Management Company Limited
55. UTI Technology Services Ltd.
56. Vijaya Bank
57. Yes Bank Ltd
58. Zen Securities Limited

NPS Intermediaries
 Collection of Funds from identified
POP/POP-SP
 Pooling of Funds at Trust Account at
Nodal Branch. Fund Receipt
Confirmation to CRA
 Remittance of funds to PFMs, as per
CRA
 Fund Reconciliation with CRA
Trustee Bank (TB)
Trustee Bank
is
Axis Bank

NPS Intermediaries
 Performs the investment management
functions under the NPS
 PFMs invests strictly in accordance
with guidelines issued by the
PFRDA/NPS Trust
 Provides daily NAV under NPS
Pension Fund Managers (PFM)
Pension Fund Managers under
Unorganized Sectors are:
 ICICI Prudential Pension Funds
Management Company Limited
 Kotak Mahindra Pension Fund
Limited
 SBI Pension Funds Limited
 UTI Retirement Solutions Limited
 HDFC Pension Management Co. Ltd.
 LIC Pension Fund Ltd.
 Birla Sunlife Pension Management
Ltd.
 Reliance Capital Pension Fund Ltd

PFM - Profile
 Sponsors of the Pension Fund are either a Central or State
Govt. company, Central Public Financial Institution,
Scheduled Commercial Bank, Insurance Company or Asset
Management Company (AMC) regulated by RBI, SEBI or
IRDA.
 Sponsors of the Pension Fund have
 minimum 5 years experience of Fund Management,
 monthly average AUM of not less than Rs.8000 crores,
 minimum positive net worth of Rs.10 crores.
 The Pension Funds are incorporated as a Separate Company
under Company Act 1956, with direct or indirect FDI not
exceeding 26% of the paid up share capital.

NPS Intermediaries
 Providing Custodial services in
compliance with SEBI Custodial
Regulations 1996
 Settlement Processing of Assets
 Safe keeping of securities -
Electronic
 Physical Custody of Securities
 Corporate Actions
Custodian
Stock Holding Corporation of
India (SCHIL)
Is
Custodian

NPS Intermediaries
 Responsible for delivering a
regular monthly pension against
the accumulated NPS corpus to the
subscriber.
Annuity Service Provider
Annuity Service Providers
under NPS
1. Bajaj Allianz Life Insurance Co. Ltd.
2. HDFC Life Insurance Co. Ltd
3. ICICI Prudential Life Insurance Co. Ltd.
4. Life Insurance Corporation of India
5. SBI Life Insurance Co. Ltd.
6. Star Union Dai-ichi Life Insurance Co. Ltd.
7. Edelwess Tokyo Life Insurance Co. Ltd.
8. India First Lfe Insurance Co. Ltd.
9. Canara HSBC Oriental Bank of Commerce Ltd.
10. Kotak Mahndra Life Insurance Co. Ltd.
11. Max Life Insurance Co. Ltd.
12. Tata AIG Life Insurance Co. Ltd.
13. PNB Met Life Insurance Co. Ltd.

Reach of NPS
20
Central
Government
State
Government
Unorganized
Sector
NPS
Lite
PFRDA
NPS Trust
Central Record Keeping Agency
Trustee Bank
Common
Stakeholders
PAO
Directorate/
DTO
POP/POP-SP Aggregator
CG Employee
Pension Fund Managers
Custodian
Sector
Specific
Stakeholders
SG Employee
Voluntary
Subscriber
Economically
Disadvantaged
Group
Corporate
Sector
CHO/ CBO
Corporate
Underlying
Subscriber

Key Features of NPS
 PFRDA, a Prudent Regulator created by Government of India.
 Central Record keeping lies with NSDL which is associated in various National level
projects for recordkeeping functions.
 Renowned Financial Institutions covering Public/Private Sector Banks, NBFC, Broking
houses acting as POP.
 Funds are managed by funds managers from Public & Private sector with proven track
record.
 Axis Bank, a bank with wide spread across India, functions as Trustee Bank.
 Stock Holding Corporation of India Ltd, who introduced Custodial services in India,
functions as custodian for NPS.
Unbundled Architecture, where each function is performed by different entity.
NPS provides an opportunity for subscribers, to be serviced by intermediaries which are
renowned in their area, that too at low cost

Key Features of NPS
 12 digit unique number
 Issued by Government of India, hence can
be used as Identity Proof
 In case lost/stolen, Provision of reprint of
PRAN card on chargeable basis
Every individual subscriber is issued a Permanent Retirement Account Number
(PRAN) card

Key Features of NPS
 NPS account can be operated from anywhere in the country irrespective of
employment and geography
 Subscribers can shift from one sector to another
 For ex: A subscriber of Unorganised sector can move to Central Govt, State
Govt etc with same Account
 Subscriber can also shift within sector also like
 From one POP to another POP
 Within Same POP
 From one POP-SP to another POP-SP
Complete portability of Permanent Retirement Account (PRA) with respect to
geographies and employment

Key Features of NPS
 Secure web based interface provided to subscriber
 Unique I-Pin allotted to subscriber, with periodical password changing policy
 Subscriber can avail below services online:
 Can view Client master details and status of change detail requests
 Can generate Portfolio query
 Can view Transaction history showing
 Fund Manager
 Units Allotted
 NAV & Investment Value etc
 Request and print for Transaction Statement
 Can raise Grievances online against any intermediary
NPS is a fully transparent, web enabled, easy to understand system.

Key Features of NPS
 NPS is covered under the Income Tax Act, 1961 for tax benefits.
 Currently NPS has ‘Exempt-Exempt-Taxation’ (EET) where
 Investment up to 1.5 Lakh in Tier I account is exempted
 Section 80CCD(I) covers self-contribution, which is also part of 80C
 Subscriber can claim any additional self-contribution( upto Rs. 50,000/-)
under section 80CCD(1B) as NPS Tax
 NPS allows total tax deduction of upto 2 lakh
 Withdrawal are subject to tax
 There is no exemption on Investments made under Tier II account.
Tax Treatment for NPS.

Key Features of NPS
 NAV is price of one unit of fund
 NAV is calculated at the end of each working day.
 NAV= (sum of all securities & cash) – fund’s liabilities / number of units
issued by the fund
 NAV increases or decreases as the value of fund holding increases or
decreases
 NAV of different fund manager’s differ
 Even different scheme under same PFM has different NAV
NET ASSET VALUE

Type of Accounts
Under NPS two types of accounts are available
Tier-I account:
Subscriber shall
contribute his savings
for retirement into Tier-I
non-withdrawable
account(Conditions
apply).
Tier-II account:
• Voluntary savings
facility.
• Subscriber will be free
to withdraw his savings
from this account
whenever he wishes.

Investment Option in NPS
• ICICI Prudential Pension Fund
• Kotak Mahindra Pension Fund
• SBI Pension Fund
• UTI Retirement Solutions Pension Fund
• HDFC Pension Management Co. Ltd
• LIC Pension Fund Ltd.
• Birla Sunlife Pension Management Ltd.
• Reliance Capital Pension Fund Ltd
Choice of eight
Pension Funds
• Asset Class E: Equity
• Asset Class C: Fixed Income
• Asset Class G: Government Securities
Choice of Three
Schemes
• Active Choice (Active Fund Management by
Subscriber)
• Auto Choice (Default scheme with a life cycle
fund option)
Choice of Approach
In NPS the Subscriber has the

Asset Class E: Investment in Equity Market
Instruments
Asset Class E
 The maximum one can invest in this asset class would be 75%.
 High Risk High Return
 The investment in any equity stock is limited a maximum of 10% of the
issued capital of a company.
 No investment in any unlisted security of an associate or group company
is allowed.
Objective – The investment objective is to maximise returns while investing
in chosen equites

Asset Class G
Asset Class G: Investment in Government Securities
 The asset class will be invested in Central Government and State
Government Bonds.
 Low Risk Low Return
Objective – The investment objective is to optimise risk free returns.

Asset Class C
Asset Class C: Investment in Fixed Income Instruments
 Liquid Mutual Funds of AMCs regulated by SEBI.
Fixed Deposits of Scheduled Commercial Banks (SCBs) with networth of Rs.
500 crores, profitable for last 3 years and capital adequacy ratio of over 9%.
Debt securities with maturity of not less than three years tenure issued by
Bodies Corporate including SCBs and PFIs.
 Credit Rated PFI/PSU Bonds.
 Credit Rated Municipal Bonds/Infrastructure Bonds.
 Bonds of Companies whom shares are listed in Stock Exchange.
Objective – The investment objective is to provide optimum mix of risk and
rewards.

Schemes / Investment Approach
NPS offers two approaches to invest subscriber money
Active choice -
Individual Funds
(Asset class E, C, and G )
Auto choice –
Lifecycle Fund
Gives the subscriber right to
decide as to how his
contribution is to be invested
Where the subscriber doesn’t
have financial knowledge, the
contribution will be made in
pre-defined portfolio

Approach 1: Active Choice
Subscriber have the option to actively decide as to how his
NPS pension contribution is to be invested in the three
options i.e.
 Asset Class E - investments in predominantly equity
market instruments
 Asset Class C - investments in fixed income instruments
other than Government securities
 Asset Class G - investments in Government securities.

Approach 1: Active Choice
Active Investment
Class
Equity (E) Corporate (C) Government (G)
Permissible allocation Up to 75% Up to 100% Up to 100%
Investment Risk High Medium Low
Investment Return
(potential)
High Medium Low

Guidelines for Selecting Active
Choice
 Higher the risk, higher the return and vice-versa.
For example: the Asset class E has higher returns than the G asset class, but it
also carries the risk of investment losses. Investing entirely in the asset class G
may not give you high returns but is a safer option.
 Diversify the investment and reduce the risk. One should
distribute his contribution in all the three asset classes E, C
and G.
 Higher the investment time horizon, lower is the risk.
 Periodically review the investment choices. Rebalance the
allocation as per the age, financial goals and economy growth.

Approach 2: Auto Choice
 Subscribers who do not have
the financial and investment knowledge
unable/unwilling to exercise any choice of investment,
then their contribution can be invested in accordance
with the Auto Choice option.
 In this option, the investments will be made in a life-
cycle fund.
 The fraction of funds invested across three asset classes
E, C & G will be determined by a pre-defined portfolio.

Auto Choice: Lifecycle Fund
At the lowest age of entry (18 years), the auto choice will
entail investment of 50% of pension wealth in “E” Class,
30% in “C” Class and 20% in “G” Class.
The ratios of investment will remain fixed for all
contributions until the subscriber reaches the age of 36.
From age 36 onwards, the weight in “E” and “C” asset
class will decrease annually and the weight in “G” class will
increase annually till it reaches 10% in “E”, 10% in “C” and
80% in “G” class at age 55.

Auto Choice: Lifecycle Fund
Moderate Life Cycle Fund Aggressive Life Cycle
Fund
Conservative Life Cycle
Fund
Asset class in (%) Asset class in (%) Asset class in (%)
Age E C G E C G E C G
Up to 35
years
50 30 20 75 10 15 25 45 30
40 years 40 25 35 55 15 30 20 35 45
45 years 30 20 50 35 20 45 15 25 60
50 years 20 15 65 20 20 60 10 15 75
55 years 10 10 80 15 10 75 5 5 90

Rebalancing Feature
In case of Active Choice –
A cap of 50% on investment under Equity scheme is applicable. In
case this limit is exceeded, rebalancing will need to be carried out once
in a year on the date of the birth of subscriber.
In case of Auto Choice –
Dynamic (system driven) rebalancing across scheme as per the age
wise allocation ratio will be carried out on the date of birth of the
subscriber.
When there is variation in Subscriber Corpus Allocation due to the NAV
fluctuation, rebalancing needs to be done.

NPS Contribution Payment Process-CG Employee
 w.e.f 01 Apr 2019, monthly contribution would be 10% of BP plus
DA to be paid by the employee.
 Government contributes 14% of the emoluments every month.
 During EOL including on medical grounds, no contribution either
from employee or from Government.

Comparison of Fund Growth
Growth of Fund value @ 9% for Annual Contribution of Rs 1,00,000 in Comparable Products

Monitoring Compliance
 Compliance with disclosure requirements and the Code of
Conduct specified by PFRDA from time to time.
 Management of Pension Funds in line with the Investment
Management Agreement signed with the NPS Trust .
 Pension fund maintains their separate accounts and audits are
conducted by agency appointed by PFRDA.
 The audit agency checks the NAV calculation procedure and
computation of other charges on subscriber.
 Periodic reporting and Performance Review by PFRDA/NPS Trust.

Measuring PFM Performance-Monthly
S. No Report / Content
1 Details of the Portfolio Value for each scheme.
2 A calculation of the total percentage return (money and time weighted) on
the Portfolio for each scheme for the period.
3 A subdivision of Portfolio Value into each type of security showing market
value in rupees and as a percentage of total Portfolio Value.
4 Details for each investment in the Portfolio including (as per Details
column)
• Name of investment,
• Number of units (eg shares = number of shares, bonds = face value);
• Carrying value of investment,
• Market value per unit
5 Details of all transactions effected by the Manager during the period.
6 Amounts received or accrued during the period to which the report
relates.
7 The management fee (included in the monthly report at the quarter end)

Measuring PFM Performance -Quarterly
1 Overview of portfolio positioning including evaluation of
• current economic conditions,
• prospects for securities markets,
• justification for the positions and transactions in the portfolio,
• attribution of performance over last quarter (and year when applicable) on
absolute basis as well as relative to the specified market benchmark,
• outlook for returns for the portfolio.
2 All transactions carried out between the schemes, PF and its associates
or purchase/sale of securities of group companies of sponsor.
3 All transactions in securities by key personnel of PF in their own
beneficial interest (either in own name or through associates).
4 Internal audit reports from independent auditors, compliance certificates
and subscriber complaints reports
5 Statement of compliance with investment guidelines

Measuring PFM Performance - Yearly
1 Statement regarding the current status of the sponsor’s regulatory
licenses and details of any changes in the name or capitalisation of the
PF company or sponsors.
2 Statement of income and expenditure and a balance sheet reflecting the
position of the funds, investments made, and a statement showing the
amount of interest accrued but not realised as on closing date of the
financial year.
3 All service contracts carried out between schemes, PF & its associates.
4 All service contracts such as for custody arrangements and transfer
agency of the securities are executed in the interest of subscribers.
5 Summary of all activities and compliance with guidelines.
6 Annual statement of audited accounts of the scheme.

Risk Management
 Option to remain invested even after retirement.
 Unlike other pension plans NPS gives subscriber an option to
remain invested in the scheme even after the age of retirement.
 50% cap on equity with rebalancing feature.
 To protect the subscribers contribution, investment in equity is
limited to 50%.
 Auto choice option.
 Where the subscriber doesn’t have financial knowledge, the
contribution will be made in pre-defined portfolio.
 Option to switch PFM & change asset allocation ratio.
 Subscriber has option to change PFM if he is not satisfied with the
performance of fund, charge structure, quality of service etc.
 Subscriber has option to revise the asset allocation ratio based on
age and financial goals.

Annuity in NPS
 Annuity is the fixed monthly (periodic) income which a subscriber will get
against the corpus invested.
 The larger the corpus size, bigger the annuity.
 In case of normal retirement, subscriber can annuities a minimum of 40% and
maximum of 100 % of his corpus towards buying annuity.
 NPS provides an option to the subscriber to decide his retirement age which
can be anytime before 60. In such case subscriber can annuities a minimum of
80% and maximum of 100 % of his corpus towards buying annuity.
 At the time of exit the subscriber will have an option to purchase annuity
online.

 Subscriber would be given the following online facilities –
 Selection of Annuity Service Provider (ASP).
 Selection of annuity scheme.
 Option to change ASP & scheme (if already registered) before
attaining retirement age.
 The entire transfer of amount between NPS System and ASP
will take without any manual intervention.
 ASP to be regulated by IRDA.
Annuity Selection

Types of Withdrawal
Normal Retirement
Conditions for
Withdrawal
Pre-mature Retirement
Death of subscriber

Withdrawal Process
Subscribers /
Nominee
CRA
Pension Fund
Manager
Trustee Bank
Transfers
settlement
amount online
POP Branch
Maker Checker
Submits
withdrawal
form along
with
relevant
Docs
POP process withdrawal
request online in CRA
system through maker-
checker process.
Assumption: Annuity Service Provider (ASP) and scheme already selected by subscriber
• Executes request
received from
POP
• CRA sends
withdrawal
instructions
online to Trustee
Bank & PFM
On receipt of CRA
instructions, PFM as per
T+3 day’s NAV calculates
and transfers money to TB
Sends
instructions
T = POP authorizes
withdrawal request
TB transfers settlement
amount on T+3 day into
subscribers bank account
or give cheque

Normal Withdrawal
 Normal retirement – On attaining age of 60 years
Procedure
•Subscriber to submit withdrawal form to POPs
•Annuitize min. 40% of pension wealth and withdraw 60% as lump sum or in
phased manner
Documents
required
• PRAN card
•Copy of PRAN card
•Withdrawal form
Timelines
•Subscriber receives settlement amount of lump sum 60% on T*+ 3 days
directly into bank account or through cheque
•Remaining min. 40% or above goes to ASP online on T*+3 days
T*=date of withdrawal request authorized by POP in CRA system

Premature Withdrawal
 Incase of premature retirement – At any point in time before 60 years of age
Procedure
•Subscriber to submit withdrawal form to POP
•Annuitize min. 80% of pension wealth and withdraw 20% as lump sum
or in phased manner
Documents
required
• PRAN card
•Copy of PRAN card
•Withdrawal form
Timelines
•Subscriber receives settlement amount of lump sum 20% on T*+ 3 days
•Remaining min. 80% or above goes to ASP online on T*+3 days
T*= date of withdrawal request authorized by POP in CRA system

Withdrawal in case of death
Procedure
•Nominee submits withdrawal form to POP
Documents
required
•Death certificate of the deceased
•Identification proof of the nominee
Timelines
•Nominee receives lump sum settlement amount in T*+ 3 days directly into bank
account or through cheque
 Incase of death due to any cause– If Nominee exists

Withdrawal in case of death
 Incase of death due to any cause– If Nominee does not exist
Procedure
• Legal heir to the deceased submits withdrawal form to POPs
Document
s required
• Death certificate
• Legal heir certificate as applicable by Court of Law
• Identification proof of the legal heir
Timelines
• Legal heir receives lump sum settlement amount in T*+ 3 days

Deferred Withdrawal
 On attaining Normal Retirement age of 60 years, subscriber is
required to invest minimum 40% of his/her accumulated savings
(pension wealth) to purchase a life annuity from any IRDA-
regulated life insurance company
 The remaining pension wealth can be withdrawn as lump sum at
any point of time before the age of 70.

Partial Withdrawal
 Conditions of Partial withdrawal:-
 (a) Subscriber should be in NPS for 03 years.
 (b) Withdrawal amount not to exceed 25% of the contributions made by the
subscriber.
 (c) Withdrawal is allowed only against specified reasons:-
 (i) Higher education of children.
 (ii) Marriage of children.
 (iii) For purchase /construction of residential house or flat in his or her own
name or in a joint name with spouse. If already owned, then no withdrawal
be permitted.
 (iv) For treatment of specified illnesses (including Dependants)
 (v) Subscriber is allowed to withdraw a maximum of 03 times during
entire tenure of subscription.

Return Illustration - @ 7% Growth*
What do you
pay -
Monthly
Contribution
(Rs.)
How long you pay - Investment Period
10 years 20 years 30 years 40 years
What you get - Monthly Pension Returns (in Rs.)
500 423 1,317 3,073 6,529
1,000 847 2,633 6,147 13,059
2,000 1,694 5,266 12,294 26,118
* Benefits are variable with returns based on future performance of the Investment
Funds managed by PFMs. For the purpose of this illustration, we have used 7% as
growth rate of investment return in the calculations.
• Other Assumption
• Return from any of the asset allocation E, C, and G is taken as 7% both during investment and
retirement period
• Subscriber would annuitize 100% pension corpus on retirement
• Subscriber would receive monthly pension returns as per Life Annuity plan

Date on which
any transaction
(Contribution
payment, charge
deduction, unit
allocation etc.)
tales place
Net Asset Value and
Unit details on day of
transaction
Subscriber’s
contribution in
last financial year
Subscriber’s
Account Details Subscriber’s
POP SP Details
Name of Scheme
and % allocation

Introduction to Central Grievance
Management System (CGMS)
 Central Grievance Management System (CGMS) is the
platform to register grievances for all entities in CRA
system.
 A UoS subscriber can raise grievances against
 CRA for services provided by CRA and
 POP/ POP-SP.

Key Features of CGMS
 Centralized and transparent platform for grievance
resolution.
 Stipulated timeframe to resolve grievance.
 Unresolved grievance gets escalated.
 Email alert sent to concerned entity on resolution/
escalation.
 Centrally monitored by PFRDA.

Modes of Raising Grievance
 Call Centre/Interactive Voice Response System (IVR)
 The Subscriber can contact the CRA call centre at toll free
telephone number 1-800-222080 and register the grievance.
 Dedicated Call centre executives.
 Physical forms direct to CRA
 The Subscriber may submit the grievance in a prescribed
format to the POP – SP who would forward it to CRA Central
Grievance Management System (CGMS).
 Subscriber can directly send form to CRA.
 Web based interface
 The Subscriber may register the grievance at the website
www.npscra.nsdl.co.in with the use of the I-pin allotted at the
time of opening a Permanent Retirement Account.

Grievance Management Process
Entity Raising the Grievance
Logging / Digitization of grievance
CGMS
DATABASE
Resolution
Yes No
Intimation
of resolution
Escalation
Intimation of
Ticket no.
Status through
website/email
/IVR/call
centre
Through
e-mail

Escalation Mechanism
 CGMS has automatic and manual escalation mechanism for
monitoring the status of the grievance.
 Maker-Checker concept in case of resolution of all the 'Escalated
Grievances‘
 If the subscriber does not receive any response within 30 days or are
not satisfied with the resolution by CRA, he can apply to the Grievance
Redressal Cell (GRC) of PFRDA.
 There will three (3) levels of resolution, namely L1, L2 and L3 for
Grievances raised against CRA.
 L1 will be the initial level for grievance received.
 L2 will be the second level of resolution with 1st level of escalation.
 L3 will be the specialized and unified grievance resolving team and
with 2nd level of escalation.

Some Example of Grievances
 Incorrect PRAN account details (on registration).
 Statement of Transaction not received.
 Change request updated incorrectly.
 Change request given but not updated in account.
 Switch instruction executed incorrectly.
 Switch instruction not executed.
 Delay in executing switch instruction.
 T-Pin/I-Pin not received.
 Request for duplicate PRAN card not initiated.
 Request for I-Pin/T-Pin reissue not initiated.
 Contribution amount not reflected in account.
 Incorrect contribution amount reflected.

Whom to approach to subscribe to NPS
 To distribute NPS, PFRDA has appointed –
 58 entities to function as Points of Presence (POPs)
 29000+ Points of Presence-Service Provider (POP-SPs) branches
 List of POP-SPs available at
• www.pfrda.org.in
PFRDA website
• www.npscra.nsdl.co.in
CRA website

Eligibility Criteria in NPS
 NPS Eligibility Criteria
Tier I Account Tier II Account
Entry Age - Min: 18 years; Max:65
years
Any subscriber who has an active
“Tier I” account under NPS can
open Tier II Account
Subscriber should be an Indian
Citizen
Subscriber should comply with the
Know Your Customer (KYC)
norms as detailed in the subscriber
registration form
Subscriber should not be holding
any pre-existing account under
NPS

 Subscriber registration forms availability –
 Forms available at the nearest POP & POP-SP branch
 Online – www.npscra.nsdl.co.in
 Types of forms –
Composite Application
Form (CAF) (For Tier I
& II both) - UOS-S1
Tier II application for
IRA Compliant
Subscribers – UOS-S10
Tier II application for
Non-IRA Compliant
Subscribers – UOS-S11
NPS Registration Form

Regular Contribution Upload
 PoP/PoP-SP shall perform all due diligence in accepting NCIS from subscriber and
will check for PRAN no., Name, Payment details etc.
 Upload subscriber contribution details online into the CRA system.
 Remit the clear funds, after deducting its charges and applicable tax, to the Trustee
Bank on T+1 basis for the corresponding PRAN of the subscriber. (T: date of receipt of
clear funds)

Subscriber Servicing
 Provides NPS services to subscriber
 Subscriber Registration
 Regular subscriber’s contribution
 Change in subscriber details
 Change of investment scheme/fund manager
 Processing of withdrawal request
 Processing of request for subscriber shifting
 Issuance of printed Account statement
 Attend request from subscriber for the re-issue of i-pin , t-pin , PRAN card
 Any other service prescribed by PFRDA

Grievance Handling
Activities carried by PoP/PoP-SP for handling grievances from the
subscribers and other NPS Intermediaries:
 Receive and upload all grievances submitted by the subscriber in the
Central Grievance Management System (CGMS) of CRA on a daily
basis.
 If PoP/PoP-SP has grievances against any NPS Intermediary such as
CRA or TB, it shall raise grievance using CGMS of the CRA or at the
CRA call centre.

Grievance Resolution
The grievances against a PoP/PoP-SP raised either by the subscriber or by the
NPS Intermediary shall be resolved within 7 days of receiving of grievance :
 the POP-SP is expected to resolve any such grievance within three days;
 in case of no resolution the grievance within first three days of reporting of
such, it will be escalated at POP level and will be expected to be resolved
within maximum 4 days thereafter)
 the resolution shall be posted in the CGMS system for each grievance.

MIS Uploading
POP-SP shall prepare various types of MIS and upload the same to
the CRA system. For each type of request the POP-SP shall prepare
and upload separate MIS file.
 Subscriber Registration
 Contribution
 Withdrawal
 Scheme Preference Change/Switch
 Subscriber Modification
 I-PIN/T-PIN Request
 Shifting of Subscriber from one POP-SP to another
 Dishonored Cheques
 PRAN Card Reprinting

PERFORMANCE OF DIFFERENT FUND MANAGERS
a) NPS CALCULATOR-For subscriber investing Rs. 6700/- per
month & assuming a return of about 8%, fund value will be
approx 01 crore after 30 years.
a) UTI Retirement Solutions generated 8.94% returns over ten
years period, while maximum return of 10.4% generated by
Kotak over seven year period.
a) Subscriber needs to select fund options, PFM, investment
strategy and annuity provider.
a) Actual return depends upon PFM selected.
a) In case no option given, SBI Pension Funds will acts as the
Pension Fund Manager

PERFORMANCE OF DIFFERENT FUND MANAGERS
Scheme wise Pension Fund wise return as on March 31,2021 Since inception (in per cent)
Scheme SBIPF LICPF UTIRSL KOTAK HDFC ICICI BIRLA
CG 10.11 9.86 9.85
SG 9.80 9.86 9.85
NPS Lite 10.37 10.39 10.34 10.19
APY 9.55 9.97 9.89
Corporate CG 10.00 10.05
E-1 10.28 12.09 11.78 11.14 14.81 11.90 12.18
C-1 10.51 10.26 9.43 10.10 10.47 10.46 9.98
G-1 9.86 11.28 8.85 9.08 10.28 9.12 9.15
A-1 9.43 7.78 5.81 7.43 8.26 6.79 5.84
E-II 10.08 9.62 10.47 1049 12.63 1026 12.09
C-II 10.09 9.60 9.50 9.38 9.56 10.32 8.93
G-II 9.88 11.54 9.57 8.85 10.45 9.23 8.04

Best performing NPS Fund Manager - Central
Government Plan (Data as on Aug 2020)

Best performing NPS Fund Manager -
State Government Plan

Best performing Tier I Equity NPS Fund
Manager (Scheme E)

Best performing Tier II Equity NPS Fund
Manager

WHY SOME STATES SWITCHING TO OPS
a) MARKET UNCERTAINTY
a) GROWING RESENTMENT
a) REDUCING BURDEN ON EMPLOYEES
a) ATTRACTING GOOD TALENT
a) POPULIST MEASURE

SUGGESTIONS
To Pension Subscribers
a) Improve Financial Literacy concerning NPS, particularly about
different Asset Classes for reducing Investment Risk.
a) Carefully watch performance of Pension Fund Managers by
analysing the net asset value & take decisions.
a) In addition to NPS, subscribers should explore investing in
other alternatives such as fixed income saving bonds, gold
and real assets.

SUGGESTIONS
To Pension Fund Managers
a) A monthly detailed report with regard to the subscribers
investment corpus pension amount may be given to the
subscribers.
a) Pension Fund Managers may conduct periodical meetings
regarding grievance handlings .
a) PFM to ensure that there is not much fluctuations in NAV.
a) PFM to appoint qualified & experienced persons to deal with
pension funds in stock market.

SUGGESTIONS
To Government/ Employer
a) Government may try to provide a minimum guaranteed
amount of pension at the time of retirement/ Design an
assured pension scheme.
a) Government/ Employer may contribute extra amount to the
pension investment for getting more lump sum as well as
annuity to the pensioners.
a) Government/ Employer may put extra efforts to increase
financial literacy of subscribers.
a) Exempt Exempt Exempt (EEE) may be given to pension
subscribers in NPS.

SUGGESTIONS
To Pension Policy Makers
a) Withdrawal facility in Tier-I account of NPS may be eased.
a) Improvement in Financial Literacy, some extra benefits may be
tried to be introduced.
a) Future pay commissions should move towards concept of
“CTC” and include cost of assured pension while determining
pay revisions.

BIBLIOGRAPHY
BOOKS
(a)Swamy’s Handbook
(b)Prabhat Patnaik, “For a Universal Old Age Pension Plan”
WEBSITES
(a)www.pfrda.org.in
(b)Pensionersportal.gov.in
(c)www.india.gov.in
(d)www.cpao.nic.in
(e)www.jeevanpramaan.gov.in
(f)www.npstrust.org.in
(g)www.economictimes.indiatimes.com

Questions ?
Thank You

FINAL NPS PPT 30 AUG.pptx

Recommended

Recommended

More Related Content

Similar to FINAL NPS PPT 30 AUG.pptx

Similar to FINAL NPS PPT 30 AUG.pptx (20)

Recently uploaded

Recently uploaded (20)

FINAL NPS PPT 30 AUG.pptx

Editor's Notes